Murray Realty Co., supra, the Referee holds: "While this provision may have required the Clerc Chemical Corp., to perform the tenant's covenants in the lease, it does not provide for any forfeiture. If there is to be a forfeiture of a lease, it should be expressly provided for in the lease."
Upon a careful consideration of the briefs submitted and an independent research of my own, I find myself in full accord with the Referee.
The lessor cites certain provisions of the New Jersey Statutes as favoring his right of forfeiture, to wit, N.J.R.S. 46:8-2, 3, N.J.S.A. These provisions have no bearing whatever on the question as to whether the word "lessee" as used in the bankruptcy forfeiture clause of the lease extends to an inclusion of the lessee's assignee.
The lessor urges that the opinion In re Lindy-Friedman Clothing Co., 5 Cir., 285 F. 22, 24, favors his contention. That opinion does say: "We are of opinion that if, before bankruptcy, there was an assignment of the lease to the bankrupt, an effect of the assignment was to make the just-mentioned provision [a forfeiture provision very much like the one in the instant case] as applicable to the assignee as it was to the original lessees", and it does appear that many of the important factors in that case are also found in the instant case. Nowhere in the Lindy-Friedman case, however, do we find any reference to the time honored attitude of the courts on the subject of forfeitures. Here in this court our late Judge Haight held in Re Larkey, D.C., 214 F. 867, 870: "Forfeitures are not favored either at law or in equity", and we find in the syllabus that: "Where a court of bankruptcy has acquired jurisdiction to determine the right of a lessor to a forfeiture under the terms of the lease, it will proceed on equitable principles and will refuse to enforce a forfeiture, if inequitable, even though, as strict matter of law, the lessor may be entitled to it" and again: "a provision for a forfeiture in a lease will be construed strictly in favor of the tenant".
It must be emphasized that the forfeiture provision in the lease here runs only against the lessee, no words are used, technical or otherwise, to extend the provision to the lessee's assignee. This is the way the parties to the lease place themselves and no constuction of the lease taken from its four corners can enlarge upon it. True, it was understood that the lease was to be assigned and it would be easy to fall into the error of concluding that this knowledge by both parties shows an intent to bind the assignee. The weakness of this idea lies in the fact that the reverse might as easily be arrived at. The equities are at least as strong on one side as the other. So the parties should be left where they placed themselves.
Moreover, we find here no privity of contract between the assignee-bankrupt and the lessor. See Meyer et al. v. Alliance Inv. Co., 84 N.J.L. 450, 87 A. 476, affirmed, and Sapienza v. Milmoe, 158 A. 114, 10 N.J.Misc. 135, affirmed.
An effort was made to inject the question of a default in the payment of rent. The Referee has not passed on this question and therefore I have ignored it here.
An order will be entered sustaining the action of the Referee.
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